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Golden Opportunity Lost?

Democrats Reflect On A Missed Chance At Tax Reform As Budget Vote Looms

June 22, 2007
By CHRISTOPHER KEATING, Capitol Bureau Chief

This was supposed to be the year things would be different.

After scoring huge election victories last November and gaining the biggest state House majority since Watergate, Democrats were champing at the bit to override the Republican governor and enact a progressive income tax on the rich. They also planned to create the state's first earned income tax credit for the working poor.

But the tentative two-year budget, which will be debated today at the state Capitol, failed on those counts - and some Democrats are highly disappointed.

"I'm not happy that we don't have a progressive income tax," said Rep. Christopher Caruso, a Bridgeport Democrat. "I'm not happy that we don't have an earned income tax credit. I came into this legislature with 107 Democrats. Unfortunately, we were not able to do it."

Caruso says Democrats squandered a golden opportunity that will not come again.

"You're never going to do it next year because it's an election year, so it will never happen," Caruso said Thursday. "When we're at the hour of true leadership, everyone goes off with their own interests."

Caruso declined to criticize any lawmakers by name, saying instead that the Democrats needed to stick together in order to enact new tax policies over the threat of a veto.

Gov. M. Jodi Rell vetoed a progressive income tax with higher rates on the rich, and the Democrats were unable to generate veto-proof margins in either chamber. Some Democrats, particularly those in Fairfield County, believed that residents in their communities would pay far more in increased income taxes than the towns would receive back in increased state aid.

House Speaker James Amann said the Democrats had a solid tax plan - which has since been withdrawn as part of the budget compromise - that would have cut taxes for the middle class and would have raised them only on the richest five percent in the state. The budget as negotiated provides huge funding for education, health care and other programs, Amann said. He predicted that the measure would pass today with 135 to 140 votes in the 151-member chamber.

House Majority Leader Christopher Donovan, a Meriden Democrat, said the Democratic caucus had done its best.

The caucus members "were actually very proud of the fact that they passed the progressive income tax," Donovan said after the House Democrats held a closed-door meeting on the budget. "They were very disappointed they didn't have the support of the Republicans and the governor."

Unlike Caruso, Rep. Timothy O'Brien of New Britain says the Democrats should try again next year. He estimated that the earned income tax credit would have provided $2 million to struggling New Britain residents, and a doubling of the property tax credit - up from the current maximum of $500 - would have brought another $8 million.

"I had great hopes for a lot of things in terms of property tax reform, education funding and health care access that were not realized as much as I had hoped," said O'Brien, who also declined to blame the Democratic leadership. "What I'm thinking is we come back, we assess what went wrong, and we work to do better next year."

The budget, which is currently about $16.1 billion, would increase by 8.89 percent in the first year and about 4 percent in the second year, officials said.

One of the issues addressed in the budget involves a controversial bail-out of the cash-strapped University of Connecticut Health Center in Farmington. UConn's plan to build a $495 million replacement for John Dempsey Hospital caused a firestorm of controversy this year among hospitals in the area, including Hartford Hospital, Bristol Hospital and St. Francis Hospital and Medical Center in Hartford. While agreeing to patch a $20 million hole in the health center's current operating budget, legislators put off committing to build a new hospital. Instead, the matter was referred to a commission for study and will be revisited next year.

Caruso wants an in-depth financial audit of the health center, noting that the state bailed out the center about seven years ago with about $20 million.

"The state is Big Daddy to UConn," Caruso said. "The attitude is they can get away with it because they have Big Daddy, and Big Daddy has deep pockets. We're just as bad because we're willing to open our pockets. If they were told, `Sorry, guys, we're not going to put up with this any more,' you'd see how fast they'd get in line."

Rep. Denise Merrill, the Democratic co-chairwoman of the budget-writing committee, said UConn needs the money to fill the "academic gap" at the medical and dental schools that are part of the health center complex. While previous hospital surpluses had been used to fund the medical and dental schools, officials say that the hospital cannot fill the gap on a continuing basis.

Both the House and Senate intend to vote on the budget today on a schedule that the leaders predict will be faster than the long, drawn-out debates of the past. House Republican leader Lawrence Cafero of Norwalk predicted that a large number of Republicans would support the budget.